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Dead Money in savings

 
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kyle f
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PostPosted: Feb 06, 2010 10:53 pm    Post subject: Dead Money in savings Reply with quote

So, say I would have around $5,000 setting in savings that doesn't need to be there. As in, my savings is linked to my checking for over draft protection, and of course I need to keep some money there to for lifes little expenses.

However, I think I have too much money sitting there right now. This is money I don't want to fully tie up in something that is not accessible if say... my Trucks transmission were to take a dump, or we need a new refridgerator all the sudden.

Anyway, so what would be a good way to get this money working better for me, but still keep it somewhat accessible. Money market, CD, leaver it where it is? Ideas?

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the_dude
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PostPosted: Feb 08, 2010 1:09 am    Post subject: Reply with quote

Almost any financial planner worth a damn will recommend you keep a minimum of 3 months of living expenses in cash. Some of the more conservative ones will even say up to 6 months or one year.

This means a savings account, MMA, or CDs pretty much.

Personally, I keep my extra cash in an online savings account because they pay the best interest, both in savings accounts and CDs, at rates that are much higher than MMA's.

A CD can be a good route too. Shop around and find a CD that has no penalty to the principle if you need to cash it out before maturity. Some have pretty reasonable penalties, like 6 months interest or 1 month interest if you cash it out early.
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kyle f
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PostPosted: Feb 08, 2010 6:12 am    Post subject: Reply with quote

the_dude wrote:
Almost any financial planner worth a damn will recommend you keep a minimum of 3 months of living expenses in cash. Some of the more conservative ones will even say up to 6 months or one year.

This means a savings account, MMA, or CDs pretty much.


Yup, this is what this money is a portion of. Its just been setting there for 2 years and has gained a totla of about $30 for being there.

I was just contemplating bette options. I know there isn't going to be any high return accounts that will return something like 8% a year with easy access to them, but possibly somethign that would make around $100/year.

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Wakebrad
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PostPosted: Feb 09, 2010 8:40 am    Post subject: Reply with quote

kyle f, doubt you can find a liquid fund that will return a consistent 8%.

I use a "high yield savings account" for what you're doing. This was returning over 5% a few years ago, but with interest rates dropping it's now only returning just over 1%. Either way this is probably much higher than your bank savings account.

Money Market is what a lot of people would tell you, but you just need to look at the best rates.

Do some searches for high yield savings accounts to find the best one.

http://www.getrichslowly.org/blog/2007/03/21/which-online-high-yield-savings-account-is-best/

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J-Ro
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PostPosted: Feb 09, 2010 1:33 pm    Post subject: Reply with quote

Check into ING online savings accounts.
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kyle f
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PostPosted: Feb 11, 2010 7:37 am    Post subject: Reply with quote

Wakebrad wrote:
kyle f, doubt you can find a liquid fund that will return a consistent 8%.



Yup, that is what I was saying...I know thats nto going to happen or everyone would be stuffing money into those accounts.


So, ING online savings accounts are workign out well for you guys. I have been a little skeptical of those for some reason.

Any drawbacks?

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PostPosted: Feb 11, 2010 11:18 am    Post subject: Reply with quote

kyle f, Nope. If you need the money just electronically transfer it to your checking account.
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kyle f
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PostPosted: Feb 11, 2010 3:18 pm    Post subject: Reply with quote

J-Ro wrote:
kyle f, Nope. If you need the money just electronically transfer it to your checking account.


Any fees with the transfer between banks?

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PostPosted: Feb 12, 2010 10:10 am    Post subject: Reply with quote

Not that i know of.
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Tyler T
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PostPosted: Feb 17, 2010 9:58 pm    Post subject: Reply with quote

Wakebrad, Cool. This might be the first time I've met a GRS reader outside of the personal finance sphere.

kyle f, ING is great because they make it so easy to create sub-accounts. I have accounts set up for an emergency fund, a house down payment, a car down payment, vacation, charity, etc.

I have auto transfers set up so that a percentage of each paycheck gets allocated to each account. I love it, but I'm all about automation.

As for bank transfers, the general rule is to always set up the transfer through the bank that is receiving the money. I've never seen a bank charge to transfer money to them, but most will charge to transfer it away. In otherwords, always pull money to the new account rather than pushing it from the old.

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PostPosted: Feb 23, 2010 6:49 pm    Post subject: Reply with quote

As Brad pointed out GRS is one of the best resources out there.

Consider me another +1 for ING. I love my sub accounts. I've been able to hedge my pets expenses (by auto drafting once a month into a pet fund), my emergency fund, my new car fund, my vacation fund... it's great. The sub accounts are awesome!
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arof
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PostPosted: Mar 02, 2010 1:47 pm    Post subject: Reply with quote

I am an ING guy too - I have sub accounts for emergency, donation, fun money.

each week, an amount gets transferred in. Love it.

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PostPosted: May 09, 2010 3:32 pm    Post subject: Reply with quote

I'm an ING guy too! Easy to transfer, sub accounts, plus I'm just a fan of Frederick, the colour orange, and Dutch people.
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